Jon Finer: I think it’s pretty self-evident at this point that the changing climate and what that leads to in terms of how people experience it — extreme weather, scarcity of key resources — is a major driver of instability in the world. And by the way, this is not just a former Democratic administration official who believes this. The US military has been saying this at the strategic highest level for more than a decade.
Jason Bordoff: Energy and climate change are becoming ever more central to America’s national security. Foreign policy and national security discussions centered on energy used to focus primarily on oil prices and Middle East relations. Now these conversations include topics like critical mineral supply chains, clean energy competition with China, climate instability and much more. The Biden administration navigated this increasingly complex terrain for four years confronting Russia’s weaponization of energy following its invasion of Ukraine, managing climate negotiations with difficult diplomatic relationships and reshaping America’s approach to energy security in a warming world.
So how should we think about the intersection of energy, climate change, and national security going forward? What lessons can we draw from the Biden administration’s experiences?
This is Columbia Energy Exchange, a weekly podcast from the Center on Global Energy Policy at Columbia University. I’m Jason Bordoff. Today on the show, Jon Finer. Jon is part of our new class of distinguished visiting fellows here at the Center on Global Energy Policy. He recently completed his service as deputy national security advisor in the Biden administration, where he was a key architect of the administration’s foreign policy. Prior to that, Jon served in the Obama administration for seven and a half years in various positions, including chief of staff to Secretary of State John Kerry. Jon began his career in journalism, first covering major league baseball before moving to the security beat, covering conflicts in Iraq and other regions for the Washington Post. Jon joined me to discuss how energy and climate intersected with national security during his time in government. We explored the administration’s approach to Russian sanctions following the invasion of Ukraine, the complex balancing act of pursuing climate goals while ensuring energy security and competition with China. We also discussed the emerging geopolitical competition around artificial intelligence and energy resources and so much more.
I hope you enjoy our conversation.
Jon Finer, welcome not just to Columbia Energy Exchange, but to Columbia University to SEPA and the Center on Global Energy Policy. It’s great to have you here as a distinguished visiting fellow this year.
Jon Finer: Thanks, Jason. Good to be at Columbia and also good to be here with you. We go back a ways.
Jason Bordoff: Yeah, and thanks for your service over the last four years. I know how draining those jobs can be and the experience you just went through and look forward to learning from you over the coming year and beyond and letting you reflect a little bit on that experience. I’ll just note for people listening that there are a lot of important topics that we could use many hours, not just a little under one hour to talk to Jon Finer about — with decisions he was involved in that were quite consequential, like the war and conflict in Gaza and many other things. And I have seen recently you’ve had discussions at the Institute of Global Politics at Chatham House with the revamped intelligence matters and our friend Jeremy Bash. And so there are other places people listening to this can go to consume that information and they were great discussions. So I’d encourage people to do that.
I’m going to focus a little more because this is an energy podcast on issues a little more squarely focused on energy and climate and the intersection with international economic competitiveness, with national security, with geopolitics. So we’ll come to all those things, but I just want to start by for people who may not have read about you or listened to you too much before, and there’s a lot of students and young people who listen to this who also are thinking about careers in foreign policy and they want to know how to build one. When people ask me that, I don’t usually say go become a reporter and cover the major league baseball playoffs. So explain why that worked for you and how you came to this work.
Jon Finer: Sure. First of all, thank you and it is a lot of fun to be here. So I got into foreign policy, as you said, through starting my career in journalism and it was really less major league baseball playoffs — although as a Red Sox fan, sorry, attending New Yorkers out there, being able to cover the 2004 American League championship series, which some people are going to be old enough to remember was a …
Jason Bordoff: I’m old enough to remember 1986
Jon Finer: …personal highlight. I wasn’t going to bring up 1986. Thank you for doing so. Already a hostile interview, I see. But really more through covering conflicts, which I got sent to do at a pretty early stage, starting my career in Hong Kong, but then at the Washington Post getting sent to cover the invasion of Iraq, spending most of the 2003 to 2006 period with the military in Iraq and living in Baghdad outside of the Green Zone and then covering three other conflicts in the Middle East and then Russia and Georgia for the Washington Post. And through doing that, I got interested obviously in the implications of policy for people out in the world who have to live on the other end of it, but also in how these decisions get made, how the country, my country, the United States ends up in these situations and how it decides to do what it decides to do in the world and whether bringing experiences, again directly from the field into the rooms where decisions get made, could help make them better. And so that was the motivation behind eventually joining the Obama administration where we served together for, in my case, seven and a half years. And then returning to the job you described in the Biden administration.
Jason Bordoff: And talk a little bit about your decision to come here other than New York City is a great place to be, and you were looking for a place to decompress, I assume, after the intense experience you had, that there are lots of good universities and lots of think tanks and you are affiliated now as a Carnegie Fellow with the Institute of Global Politics here, but also in Energy Center. And I have thoughts about this as an energy person, I have thoughts about why national security matters, but as a national security person, why does energy and climate matter to your work and why is a place like this a place you kind of wanted to be connected with?
Jon Finer: So I was struck by — and it wasn’t an accident, the number of times and the number of ways that my work as a deputy national security advisor, again responsible along with Jake Sullivan, the national security advisor for the full range of foreign policy issues, the country faces and the administration wrestles — with how many times and in how many ways energy intersected with our work. And in many cases became the very core of what we were trying to do from a national security perspective. And I think you go back 10 years, 20 years, I don’t think things like critical minerals and energy supply chains and anything other than maybe some discussions around the price of oil would’ve come up in the windowless rooms where we discuss foreign policy. And that’s no longer true. And it’s in just about every region of the world, the Indo-Pacific, our own hemisphere, certainly the Middle East where energy policy has been at the center for quite some time and then increasingly in Europe and in our own country as well. And so I felt both like I had relevant experiences to think about and reflect on and also would be able to learn more that would be directly relevant potentially to future work because I think these issues are only going to become more salient over time, not less so.
Jason Bordoff: I want to get to several of those issues. I wonder maybe just to start though, if you could help people understand what your job was and how the National Security Council is organized, I think we’ve had as other colleagues of yours like deputy secretary Dave Turk or Wally Adeyemo, and a lot of those people in many cases function as a COO for a major agency within Dave’s case, hundreds of thousands of people. But the National Security Council is a little different. There’s a formal process, there’s a structure to how decisions are made. Talk about what your job was.
Jon Finer: Yes. So the National Security Council is the roughly — National Security Council staff, I should say — is the roughly 300, 350 people who are the president’s foreign policy team inside the White House. And what I love about the NSC is that it really is an all-star team of the best, deepest experts you can find anywhere in the US government. And because it’s the White House and because it’s an exciting place to work because the distance between having an idea and being able to execute it in the world is very short compared to being somewhere out in the bureaucracy. It’s an appealing place for people to come and spend a year or two. It is a very hard place to work. The hours are long, the work is intense, the stakes are high, but you really can get the best people available including people from outside the government who come in and do a stint for a few years as I did as a political appointee.
So you have these just deep, deep motivated subject matter experts available to the National Security Advisor, the deputy in my case, and to the president. My role has, as I describe it, really three parts. One, advising the president on the decisions that he had to make, framing those decisions for him, providing where needed the backstory, explaining the views of others within the administration if they didn’t happen to be in the room, and enabling him to make the best possible decisions that he could make. So an advisory role. Second, managing and leading the interagency policy development process at the level of deputy cabinet people, including my two colleagues you just described, who are also affiliated here, Wally and Dave, together with a number of other colleagues, we would sit around a table in the situation room and work through all of the big decisions that the administration would have to make on anything in foreign policy, any region of the world. And I’m a little bit embarrassed to say that over the course of four years, and I wish I didn’t really know this number and I don’t know it exactly. I think I shared something like 900-plus of those meetings involving the deputy cabinet. Yes. So most foreign policy decisions are made at that level.
Jason Bordoff: And the formal structure of decision making in the NSC, there is, as you said, an interagency process. Things boil up and then that deputy’s process is a pretty important decision-making place.
Jon Finer: You sit at a table and all of the people who are involved in making foreign policy are there. You’ve got the state department, you’ve got the Pentagon, you’ve got the intelligence community, the energy department, the treasury department, and you have a discussion about what the president should do and if there’s consensus, great. If there’s not consensus, then you’ve got to go to a higher level and get a decision made often ultimately by the president. So that was a huge piece of my work. And then the third piece is managing the National Security council team, the 300 plus experts I described.
Jason Bordoff: And let me just tie that… I want to get to substance. This is a little bit of a process question, but I’m interested because you brought up energy and climate matter and are interesting because you see them cutting across so many issues now and then you described this formal process of making decisions and I was wondering if you could talk about how do you build an organization, how do you structure a staff when you have these cross-cutting issues? If there’s a meeting in the situation room about getting ready for COP 28, of course you’re going to have climate people there. But when you’re talking about national security in the Sahel or critical minerals competition with China, or as you said, it’s on almost every issue. It’s not necessarily an energy issue, but energy is a component of considering it. And you tried to elevate climate with John Kerry, former secretary of state, your former boss coming in and being a special envoy and having a seat on the National Security Council. But for a lot of international diplomacy that’s different than in the building I think. I’m just curious how you think, how do we functionally make sure energy and climate is considered in all the things you just said?
Jon Finer: Yeah, so I think two ways. One, the people at the level of deputy cabinet and cabinet, as you well know, tend to be generalists. They don’t tend to be as sort of narrowly focused experts in the way maybe people are earlier in their careers. They tend to broaden out, have broader responsibilities. But it’s important given how central energy and climate are now to the broad range of policies that people at the deputy level and at the cabinet level become at least conversant in these energy issues. So it’s kind of incumbent on each of us to actually learn something about these topics. But then just as important is having that expertise in the room. So when you were talking about the Rush Ukraine war and a central geopolitical dimension of the Rush Ukraine war is Ukraine’s energy security and Russia’s attempt to militarily destroy parts of Ukraine’s energy sector and whether and how it can make it through the winter if the temperature ends up being particularly cold and how to harden Ukraine’s infrastructure and provide alternative sources of energy.
There are people that actually know the energy world in that conversation. If you’re talking about migration in our own hemisphere and the full range of issues that drive migration in our own hemisphere, including the economic situation in places like Venezuela, which is driven largely by it’s a hydrocarbon based economy, how energy issues intersect with this core national security issue of migration, you need people that understand the energy picture in Venezuela in the room for that conversation. And the same for the Middle East and the same for the Indo-Pacific. So you bring experts into the conversation so they can put their hand up and say, this is an interesting discussion, but let me tell you how it actually works on the ground in the real world and sort of reorient things in that way. And so we were blessed by having a number of people who had that background and we drew on their background and their expertise in the making of policy.
Jason Bordoff: How do you think about climate change as a national security threat to the United States? Is it one, I mean there’s a whole community of people that focuses heavily on this and issues of water scarcity and conflict and migration, all of those are certainly impacted by what we’re seeing and we’ll see over time for climate change. But when you step back and you’re like, I got a hundred problems on my desk any given day and some of them are severe, and the humanitarian catastrophe and crisis in Gaza and Syria and countries in Africa, you’re dealing with terrorism risks. There’s like a whole list of problems you had to think about. Is that like, yeah, climate change is not helping, but this is not kind of near the top of the list? Or how do you think about the real world climate change should play in national security thinking?
Jon Finer: I mean I think it’s pretty self-evident at this point that the changing climate and what that leads to in terms of how people experience it — extreme weather scarcity of key resources — is a major driver of instability in the world. Instability that produces migration, which is again, as I said, a kind of a core, a national security issue, instability that produces conflict in some cases. And you don’t necessarily need to say this war was caused by climate change in order to believe that there is a contributing role of exactly these sorts of manifestations of climate change in producing instability and conflict. And by the way, this is not just a former democratic administration official who believes this. The US military has been saying this at the sort of strategic highest level for more than a decade now and has been treating climate change as a core driver of instability and a core national security issue. And I think they’re absolutely right about that.
Jason Bordoff: And is there a tension, I mean all the modeling I’m aware of shows that to make greenhouse gas emissions, the cause of climate change go down, estimates vary and depending on what assumptions you have about technology, but hydrocarbon use is going down not to zero but substantially from where it is today. And then you have these other goals of energy security and you want to reduce dependence on imports, which phenomenally the US has done over the last 15 years, competition with China where you want to diversify supply chains. I’m curious to the extent there is tension, which there sometimes is in decisions around energy: How do you think in retrospect, the Biden administration balanced climate goals and then other national security priorities like competition with China, energy, affordability and supply, things like that?
Jon Finer: Yeah, I guess the way I think about this is sometimes those issues are in tension. Sometimes they are sort of symbiotic, in other words, pushing us both in the same direction. And like everything else in national security, there are always going to be multiple factors that you weigh in making a decision. And a good example of where all of this got brought to bear is when Russia launched its larger invasion full on invasion into Ukraine. And I suspect you may have more questions about this broad issue, but when that happened in February of 2022, at that moment, Europe was heavily dependent on Russia for its energy needs, principally gas also to some extent oil as you well know. And there had been people warning for quite some time that this dependency was not exactly geopolitically advantageous to Europe, that it enabled Russia to have this lever over European countries that it could use if it ever decided to its natural gas supply as a weapon to try to bring about political outcomes in the world.
Here you have this invasion where Russia and almost all of Europe are on opposite sides of a live conflict and not a small one, biggest conflict in Europe since World War II. And so there was a high degree of anxiety among European leaders about the future of their energy supply. And so the United States and our European allies got together and worked very closely together to figure out a way to shore up, in particular, their natural gas supply, find alternative sources of LNG. We went to other partners and allies as you know, including partners and allies in Asia who had a much more secure supply and higher levels of –
Jason Bordoff: And this wasn’t – just to ask – this wasn’t just, not to push back, but, to ask: this wasn’t just like markets doing what markets do, where prices shot up in Europe? Europe had more money than Bangladesh and …
Jon Finer: Not as simple as that, not as simple as that.
Jason Bordoff: And high prices pulled supplies to Europe instead?
Jon Finer: …[it] required diplomatic intervention with some of these countries to forgo cargoes of gas that they were due, that they had paid for and put them further back in the line, which they in solidarity voluntarily agreed to do. Obviously also working with the Europeans on building out their infrastructure to receive these supplies,
Jason Bordoff: Maybe to loosen destination clauses in some of these countries?
Jon Finer: Exactly. And got to a place where they were able to weather what was obviously at that point going to be a separation between Russia and much of Europe in terms of this supplier and recipient relationship that they had had for some time. And by the way, if you had taken a pure ‘climate change is the only thing that matters be all and end all’ approach to that issue, you might’ve been much more reluctant to do things that enabled greater flows, including from the United States of what is still a hydrocarbons based fuel to Europe. But there were a number of factors that had to be taken into account.
Jason Bordoff: Yeah, well we’ll say on that topic, as you said, that’s interesting, the role of LNG exports from the United States, and you just talked about the important role that US LNG supplies played in Europe’s energy security. And then you put a pause on the issuance of new permits. So is that in tension with what you just said?
Jon Finer: I mean, I think it’s basically reflects the fact that these are both goals that the administration set, and by the way, they’re both worthy goals. It is both worthy to become less dependent on hydrocarbon fuels for the United States and for the world. And to acknowledge the fact that particularly in these geopolitical crises that are acute in the near term, to not be so doctrinaire about what I just said, that you will not find ways to help countries that are your partners, your allies, your friends who are under enormous pressure through these difficult moments.
Jason Bordoff: Can you say something about the diplomacy that went on with that LNG pause? I know I’m familiar with a lot of discussion in the climate and environmental movement, but where you were sitting, are you sitting there with the Europeans that are like, what are you doing and this is a big problem and Japanese and others who were, how big an issue from a diplomatic and foreign policy standpoint was this position?
Jon Finer: There’s a number of things you can do. You’re right that the price environment helps address this problem. Often to an extent, people will want to shift their supplies to the places where they will get the highest price for them, but contracts are also sacrosanct in this world. And if you’re a supplier, you do not want to be seen as somebody who is just, if you have a deal in place to sell something to a particular country and the price spikes somewhere else, you’re just going to drop your customer and go where the money is. That is not good for your future business prospects and reliability and confidence people have in you. So this had to be a facilitated process. We had to both in a very immediate urgent way, go to countries that were getting these next set of shipments and say, we would like you to voluntarily forego them. We’ve looked at your storage situation, you have supplies that can get you through this immediate term period and we will make sure you’re made whole on the backend. And we didn’t know how hard those countries were going to be ultimately how hard those conversations are going to be. Ultimately, many, if not most of the countries that we approached were willing to do that.
Jason Bordoff: Yeah, I think I’m just curious. I also heard, again, people in government officials in Asia, like Japan or in Europe, sort of not quite sure what to make of the LNG pause. Again, the US was already going to be doubling LNG export capacity. I think people knew that was coming, but I also heard a lot of, and it was one piece of a larger trend, I think, tell me if you see it too, of growing sense of resentment, maybe backlash, a sense of hypocrisy at how this energy transition seemed to be unfolding in lower income countries. And so when you say that US LNG was really important to help Europe in a time of crisis, and then some of the multinational financial institutions, the multilateral development banks are saying, well, we’re not financing any fossil fuel projects in Africa. And then Biden saying, don’t worry, we’re going to send you our gas. I think that struck a lot of lower income countries as hypocritical. Do you think that’s fair?
Jon Finer: Look, I think a more mixed picture than you just laid out. And I think there are examples, and they were controversial of US institutions, some with a degree of independence because they’re set up that way, like statutorily, like EXIM Bank that did continue to finance in particular gas projects, a very large one with Guyana, which is a very interesting country because Guyana a few years ago would certainly be in the category of a lower middle income country and if it stays on its current course and speed in large part because of the exploitation of these massive hydrocarbon reserves end up being the highest per capita income country in the world in a few years. And so EXIM is leaning into that this is a country in our hemisphere that we want to help develop but develop in the right way responsibly. And we are financing a major project with them.
There’s others in Southeast Asia that would fall into this category as well. So it’s not as absolute, but you’re right. I mean this is the result of a decision-making process and a political process that has people on different sides of what are really hard arguments. And so the imperative to reduce dependency on hydrocarbons is a high priority, was a high priority for this administration and the outcome that we were able to generate in particular at the very last COP of this administration or maybe the penultimate COP, I guess this administration made a big bold statement about the future of hydrocarbons. I know you were there and Secretary Kerry, who you mentioned earlier who I was fortunate enough to work with as his chief of staff at the State Department, really drove that outcome in the last COP that he led as a special envoy. So this is what policy looks like, right? There are people on all sides of these debates. You get into a room, you have it out, either you get a consensus or you don’t and you produce options. And then you go to the president of the United States to make a decision case by case.
Jason Bordoff: And again, that issue is just one piece of a bigger picture. A bigger picture being we need trillions of dollars for the energy transition. And somewhere around half of that is going to be in at least if not more, two thirds is going to be in emerging and developing economies and a lot of pledges and commitments that wealthy countries made that are responsible for historic historical emissions. Cumulative emissions to date we’re not where we need to be yet in terms of mobilizing capital.
Jon Finer: The goalpost does move on this question and it moves only in one direction more and more and more. And it’s not because that’s inaccurate. I think the numbers you just described are accurate, but the world committed at one point to a hundred billion dollars in climate finance. We reached that hundred billion dollar threshold during the course of the last administration through a lot of work involving a lot of governments, a lot of private actors. And as you say, if we are going to succeed in managing the energy transition in a way that is least disruptive, there’s going to have to be a lot more finance channeled into these countries that need it.
Jason Bordoff: Yeah. What do you think it looks like to sort of think about international clean energy deployment with as much or much more say like the inflation reduction act? The Biden administration said this is a historic, the largest ever domestic action, certainly by the United States, maybe by almost any country on climate change, almost a trillion dollars or depending on the estimate you’re looking at. And that was a historic action for what is around 12% of the world’s emission. So the question is how do we think about the other 88%? And when you look at the role of the UN climate negotiation process, these COPs year after year and the agreements that come out of them or things we should be focused on more that we’re not focused enough on, and how do we think about the role of development finance corporation? Let’s imagine you were back in that job for four more years. What would it look like to mobilize capital and think much more ambitiously about how to get clean energy deployed faster? What should government be doing?
Jon Finer: Yeah, it’s a big and very good and important question. I think there are a couple of aspects of it. You could almost divide it into a domestic aspect and then an international aspect. Even though as we made clear, I think in our administration, the lines between what is domestic and what is international these days, especially on issues like this, are not just blurry, they’re basically obliterated. But domestically, we decided to make this major investment in restoring our manufacturing base, our ability to actually make things that were relevant to the clean energy transition and incentives, including major financial incentives to expedite the energy transition inside the United States through tax and subsidies and other things. We usually use the figure of $300 or $400 billion associated with that. And a bunch of countries came to us, including some of our friends as you know, and said, this is protectionism or this is giving your companies or your country an unfair advantage.
And some of this gets litigated. Certainly some of this gets debated and some of this debate spills out into the public. But our answer to those countries, which I think a large number of them have taken on board is one, there is a way for your countries and your companies to benefit from the investments that we are making. And effectively to go in on some of this with us, if you do things in the right way in terms of your own energy transition. But two, what does that mean? Sorry, just there are incentives that are built into the statute for companies to take advantage of some of these tax credits. And again, they have to do certain things in order to get them, but it’s there. But second, and I think in some ways, more importantly, there is a ‘don’t try to beat us, join us’ dimension to how we advise them. Essentially make these investments yourselves, follow this model if you think it’s going to work in such an advantageous way for us, there is nothing stopping you from doing this inside your own country. And I think the EU and other places
Jason Bordoff: Much harder in emerging and developing economies without the capital….
Jon Finer: Totally. And that gets to the rest of the international piece. So this was about shoring up America because at the end of the day, President Biden is president of the United States and has to prioritize the needs of our country and our people. But second, and this is I think somewhat revolutionary in where we would’ve tried to take things in a second term, what countries really want from the United States is not as much the sort of traditional development assistance that we provide through at least did provide through agencies like USAID that can be highly beneficial. Some of those programs are incredibly important, especially programs that go to poverty alleviation and global health. But in terms of economic development, what they really want from us is investment. The big comparative advantage the United States has over our competitors over, for example China is we don’t have a sovereign wealth fund. So we can’t just pump money into places because we want to
Jason Bordoff: Not yet.
Jon Finer: Not yet. We’ll see, I’m skeptical that we’re going to have one in the next four years, but we’ll see. I don’t think it would necessarily be a bad thing, by the way.
Jason Bordoff: The Biden administration had teed up that idea.
Jon Finer: Sure. Every administration, when you’re in the executive, you want a sovereign wealth fund, but we don’t have one currently. And let’s just assume for the sake of argument, we may not have one for a while. We also don’t have state-owned enterprises that can be just told to go to this strategically advantageous country and set up shop. And we don’t care if you make money or don’t make money, you’re essentially an arm of the government, but it’ll help our relationship if you do that. So what do we have? We have the ability through some of these agencies that we’ve been talking about, they’re quasi independent. In some cases, EXIM, the development finance corporation whose remit has been massively expanded by Congress, by the way in the Trump administration, to incentivize investment, private investment with a little bit of government money and other forms of incentives to places that are strategically advantageous for us and to drive outcomes we want including improvements in infrastructure writ large, which the development world badly needs, but also to incentivize the energy transition.
And so we picked a number of projects around the world, not just a building here and a building there, but we called them these strategic quarters in the Philippines in Angola where the president traveled at the very end of the administration and used these tools that were available to us in a synchronized way in concert with the private sector to try to achieve big things in Angola. It was a rail energy data corridor that linked Lobito, the main port in Angola, to Dar Assalum in Tanzania, all the way on the other side of the continent. And that is actually being built now almost entirely with private funding having now been incentivized by our administration. So I think these big investment driven projects [are] very desirable to the countries that you’re describing that otherwise worry about being left behind. And we do have tools to produce those outcomes and it lets us compete with countries that maybe have other tools that we don’t have.
Jason Bordoff: I mean, I think what I hear you saying is there’s multiple drivers like competition with China, diversifying supply chains, national security considerations for the US government playing a strong role in helping to de-risk and encourage investment in lower income countries. And some of those, maybe not all of them go in the direction of the clean energy transition as well. I mean, critical minerals, refining processing, mining, seems to be probably the most obvious example. But am I capturing right what you’re saying? And then how does building out solar in Africa, if it’s solar manufacturing, maybe you’re diversifying supply chain, if it’s actually mobilizing capital for clean energy in those places, is that, I get why that helps the transition. Why does that help with the competition and security argument?
Jon Finer: If you adopt this kind of investment based approach to creating these big projects, incentivizing these big projects, you can set the parameters for where you go about doing the investments and what types of investments you make based on whatever policy priorities you have. And if one of those policy priorities is catalyzing the clean energy transition, the people who are going out looking for deals are going to build that into their deal sourcing model because they have to be aligned with policy. And so that is what our teams at DFC and places like that did in finding the deals…
Jason Bordoff: But the issue is you’re saying we don’t have the toolkit to really do that with a sovereign wealth fund or state-owned enterprise.
Jon Finer: We don’t have the toolkit to mandate it. What we have the toolkit to do is incentivize private actors to come in behind the government and you can end up with projects that are on the same scale as countries that just take billions of dollars and direct government money to these projects. The private sector is our major comparative advantage vis-a-vis competition with these other countries. They do not have the same dynamic, innovative, desirable, private sector investment situation that we have in the United States. And so while we can’t tell those companies what to do and nor should we be able to tell them exactly what to do if we incentivize them properly, communicate with them about our priorities, work with them on these deals, we can get them in the game.
Jason Bordoff: And if climate is actually an existential crisis, you might want clean energy to be as cheap as possible. And of course it’s cheaper because China makes a lot of it. So I just want to ask you how we should think about China, lots of cheap clean energy, but you’re talking about efforts to diversify those supply chains, reduce that dominance as a motivator of the kind of investments we’ll need for… the question I started with, how do we encourage more investment? How do we de-risk private capital around the world? I guess what I’m asking is the speech your colleague Jake Sullivan famously gave about a small yard and a high fence, and then when you look in practice, it seems like the yard’s not all that small and it extends pretty broadly to a range of technologies. And national security is often given as the rationale, whether it’s a solar panel or a battery or an EV or advanced semiconductors and on and on. How should we think about competition with China and what the actual security risks are, and particularly when we think about the clean energy economy.
Jon Finer: So without prejudice to Jake’s remarks, which he has I think articulated extremely effectively and defended in what generated a really, I think, interesting debate. The one thing I will say about small yard high fence is that what is outside of the yard not bounded by the fence is the vast majority of the US-China commercial relationship, I don’t know the exact percentage, but is the overwhelming majority that is untouched by things like export controls or CFIUS for inbound Chinese investment in the United States. So most of what Americans and Chinese people are actually what’s actually impacting their lives day to day in terms of the US-China relationship is not the subject of the constraints that we’re describing. But what we’ve been very clear about is for certain in particular sensitive technologies that have this national security dimension, we are not any longer going to be in a position where we are developing things in the United States that have extraordinary capacity and capability and handing those to our competitors, which can then turn around and use some of them against us, either economically, but much more to the point militarily because many of these technologies have as a dual-use potential, and China has a military industrial fusion concept that basically means there is no pure private sector there.
If there is a sensitive technology developed by a private Chinese company, the Chinese military can and will take it and apply it to their capabilities. And so that’s their stated policy. We can’t pretend or wish that that didn’t exist. And so the constraints that we tried to place and have been placing on these sensitive technologies had all of that in mind. But as you say, China also has this critical role in the energy transition and the reduction overall of emissions is the world’s largest emitter now. And so I think there was this goal, and I think we tested this certainly in our administration, but it really stems back to the Obama administration and the Paris Climate Accord where you could fight with China about a whole range of things, but then collaborate, cooperate with China, work together essentially on this shared goal of reducing emissions.
The problem with that is that while China is dominating many aspects of the clean energy sector, they are also – simultaneous to all that – building massive numbers of coal-fired power plants and not taking the steps that would otherwise be required to actually bring emissions down. And all of the things that they’re doing in that second space run the risk of totally overwhelming the very positive aspects of the role that they’re playing in the clean energy supply chain. And so it is imperative for us to call that out to try to press them, not to take those steps, but it is not as simple as, well, we can’t be too tough on China because they’re so central to clean energy. They’re taking a number of steps that actually cut totally in the other direction when it comes to emissions.
Jason Bordoff: Yeah, for sure. I’m listening to you and I’m thinking of the chat I did with Eddie Fishman who just published this great book, Chokepoints,
Jon Finer: My former colleague at the State Department.
Jason Bordoff: And it was a great read. I really recommended it to people, great contemporary history of the use of tools of economic war like sanctions and tariffs and export controls. And the story he tells is one of over several decades we created a more integrated global economy, had a lot of benefits as a result, and one effect of that was more potential for these chokepoints, the US with the dominance of the US financial system, and the dollar, could weaponize that in ways with the deployment of sanctions. We’re also vulnerable because now you have a global integrated economy where in 90% of solar panels and batteries and graphite and things come from China. And I’m wondering if you think that is obviously much more top of the agenda now, the risks of that integration. So when you think about where economic security comes from, does it necessarily require walking back that global economic integration, putting up walls, manufacturing things at home instead? Is that where we’re headed now? Like a reset?
Jon Finer: I mean maybe to an extent, and I’ll tell you the theory behind the order that you just described, which we have all at various times been major champions of, and people who have devoted parts of our lives to defending, was sound. It was about two things. It was about trying to avoid conflict among major states in particular and trying to increase prosperity in all of those states. And by the way, it worked to an extent, but it also failed to an extent. What I mean by that, okay, so on the metric of avoiding conflict to a large extent, certainly since the end of World War II and really in particular since the end of the Cold War, while we have had a series of conflicts around the world, we have avoided great power conflict, which could have been devastated and pull us back into a sort of world war type situation.
But as you just indicated, these mutual dependencies, while they on some level raise the stakes of countries going to war with each other because you have a lot more lose including economically if you do that in the event where there is conflict, countries have an incredible ability to hurt each other economically that did not exist between the United States and the Soviet Union in World War II. We can and we could and we did impose rudimentary early stage sanctions on the Soviet Union, but we had very little economic interdependency in the way that we have today, for example, in China. So we created this vulnerability, our vulnerability, and their vulnerability on the prosperity scale. I think the real problem was not that there was not massive macroeconomic growth in these countries, including in particular China, which has experienced sort of historic, unprecedented unmatched economic growth over decades, but how evenly and how equally that growth flowed throughout society.
And particularly talking now about the United States and the aftershocks of China joining the WTO, which produced these dislocations that even though in the United States the sort of trajectory of our GDP growth is up and up and up over years, maybe not as far up as policymakers sought, but inexorably improving the macroeconomic situation. For a lot of Americans, they didn’t feel that and it didn’t feel that way to them, and there was too little done by policymakers to ameliorate that and to mitigate that. And so the prosperity goal of this order also for a lot of people did not seem to be succeeding in the way it did. And so the combination of those two things, the sort of vulnerabilities from a security perspective, the dislocations of integration from an economic perspective have led people and not just revisionist powers like Russia and China, but Americans including Americans in very senior positions of policy to question whether there at least need to be revisions, not a wholesale abandonment of this order, but revisions to account for places where it didn’t actually succeed.
Jason Bordoff: Is that a point of continuity from Trump to Biden to Trump?
Jon Finer: Yeah, I mean that seems to be an, I think that critique is one in which there is a degree of bipartisan consensus. What you actually do policy wise to address this critique, I think is an area in which there is much more division and debate.
Jason Bordoff: I mean, Biden kept tariffs in place on China and Trump’s obviously escalating tariffs. But is it a difference just in degree?
Jon Finer: So people often will point to the fact that we did not significantly alter the tariff structure as an example of just continuity in our approach to China and Trump’s. I see that very differently. I think a major part of our approach in the Biden administration to China was that the United States has in the world a massive comparative advantage over China. And that is that we have friends, we have partners and allies. So in a world in which you are locked in this major competition, if you are enhancing and improving security ties to your partners and allies, your economic ties to your partners and allies, you are actually advantaging yourself. You have a force multiplier when it comes to competition with China. The current administration has a totally different view of this. They seem to see partners and allies as less of a net benefit to the United States and much more of a net burden to the United States.
The way they talk about this is these are people who extract more from us than they provide to us when it comes to prosperity and security, and they are going to redress that imbalance. And so that is just a different worldview, and I think we feel very strongly that we were right about this. I’m confident they feel equally strongly that they’re right about this. But when it comes to competition with China, that is one area where I have to say we’ve just diverged completely. And I think if you look around the world at the relationship that China had with the European countries, when we came to office on the cusp of sealing an investment agreement with the EU when the Biden administration began not even close to that now at the relationship China had with India, when we took office and some of the southeast Asian countries, when we took office thinking in particular about the Philippines compared to now we have put the United States had put by January of 2025 in a much more advantageous position vis-a-vis China.
Now, a lot of this is not our policy. I will acknowledge a lot of this is China overplaying its hand bullying countries like India and Australia, bullying the Europeans too, sanctioning members of the European parliament who spoke out or voted for things that China didn’t like, and then earning enmity and a rebuke in the process. So China did not play its cards. Well, and China’s macroeconomic picture inside its own country has shifted. Nobody is saying as confidently China’s economy is going to overtake the United States the way they did back in 2021 when we came to office. So China has its own problems and has played its hand, I think not particularly well, but the role that we played in building these relationships of mutual advantage, I think played also a significant role in putting China on the back foot.
Jason Bordoff: This conversation’s fascinating in so many ways, but one that just occurred to me is where you started, which is why is energy important to national security? And you said 20 years ago we would’ve only talked about oil and we haven’t talked about oil yet.
Jon Finer: Oil and probably only in the context of the Middle East 20 years ago.
Jason Bordoff: Yeah. So I want to ask you about it because it kind of ties to what we were just talking about. We’re in a more interconnected world and those interconnections create chokepoints like the ability to use sanctions. But oil markets are interconnected too. And that’s a problem because you want to impose pain on a target of sanctions without imposing pain on yourself economically, politically by pushing up prices. So Iran, Russia, Venezuela, for example, there’s a perception, tell me if it’s correct, by some that the Biden administration took a more lax approach to sanctions enforcement say on Iranian oil exports. And partly that was because concerns by gasoline prices were so acute, you released a huge amount of oil from the SPR after Russia invaded secondary sanctions, in theory, maybe could have been imposed by Europe and the US on Russian oil, but again, that’s just even more larger amount of oil. So that would’ve really, really pushed up oil prices. Talk about the intersection between those different considerations, economic, political, and how you think about the way the Biden administration pursued sanctions policy with, let’s start with Iran maybe.
Jon Finer: Sure. I’ll get to Iran in a second, but I think just the premise of your question is very interesting to me. The reason I think it’s your podcast and you’re driving what we discussed, but I think one major reason why we haven’t gotten to oil yet is the price environment. And if we were in a moment in which Brent and WTI were above a hundred dollars a barrel, I think you probably would’ve started or gotten to oil much more quickly. So the way these things feel in the government is really driven to large extent by how much pressure you are under economically, including at home, including when it comes to the price of gasoline because of the price of oil and with oil around whatever it is, $70 a barrel right now. You don’t have to do it in the first 20 minutes of the podcast.
You can do it, you can do it in the middle, you can do it at the end, the minute the price starts to spike, this becomes immediately front and center for every administration because it is something Americans acutely feel price the pump. So that’s one point. So how did we handle these things on your Iran point? I have one. I think I have a frustration that I will explain, which is people will often look at a chart of Iran’s illicit and explicit oil exports starting at the beginning of the Biden administration or the last year of the first Trump administration to the present day. And they will see that that shows a trajectory creeping up more and more and more exports. But I think what people often do not include in their analysis and should is that those years 2020 and 2021 were years of massively suppressed demand globally because of obviously the economic ramifications of the COVID crisis.
And so there just wasn’t the same demand for Iran’s energy supply in that moment as there was today. It wasn’t just that that administration took a more effective approach to sanctions enforcement and we didn’t. And in fact, the truth is, you mentioned previously we didn’t do anything to adjust or mess with the Trump tariffs on China. We also did not in any way reduce the sanctions burden that the Obama administration and then the Trump administration had placed on Iran. Now that is all true. Where it gets more complicated is, you’re right that sanctions enforcement is not just about making a bunch of rules and then sitting back and seeing how they’re followed. You have to go out and aggressively iterate, find people who are flouting those rules or who have identified loopholes in those rules, adjust the rules, work with countries diplomatically to prioritize enforcement and make sure third countries are not helping Iran or other targets avoid the burdens of our sanctions.
And we did quite a lot of that. We can debate whether we did enough of it or should have done more of it, but that was a fundamental priority of our policy. And I think we did that with a significant degree of effect. Last thing I’ll say about Iran, I mean, again, I tend to want to measure these things. We were there for four years, so I tend to want to measure these things. What was the strength and position of Iran when we started? Same way I just did with China and what was the strength and position of Iran in the world and in its region at the end of those four years? And I think there is a very clear and convincing case to make that Iran is strategically right now in 2025 at maybe the weakest point that it has been in decades and not unrelated to the policy approach that our administration took in the Middle East, including in the aftermath of the October 7th conflict where Iran lost two of its key proxies, Hamas and Hezbollah. Not entirely lost, but badly diminished, lost its only real ally in the region, Bashar Alad, who fell yes, because of internal opposition, armed opposition in Syria. But also because his two friends, Iran and Russia were so preoccupied with other things and so diminished, again related to the policy choices we made in the Middle East and in Ukraine that they could not come to Assad’s defense. And all of this has left Iran much more insecure, much less influential in 2025 than they were in 2021.
Jason Bordoff: Just to be provocative, I was very critical of the Trump administration’s decision to scrap the Iran deal that folks negotiated. Is what you just said, that they’re at the weakest point ever. Does that maybe somehow validate that decision?
Jon Finer: Not at all because unfortunately, the part of Iran’s kind of threat matrix that is most disturbing and maybe most directly threatens American security is the nuclear program. And there you can draw a straight line between withdrawal from the JCPOA, which was negotiated in the Obama administration withdrawal by the Trump administration and the state of Iran’s nuclear program, which under the JCPOA, which Iran did not violate according to the monitors from the IEA, according to US intelligence, community and policy, Iran did not violate that agreement. And under that agreement, Iran’s breakout time, the amount of time it would take Iran to develop enough weapons grade uranium for one bomb was more than a year. Right now, that number is reportedly a matter of a few weeks. That is not a great situation and it’s directly tied to getting out of the JCPOA, which is why you are seeing even President Trump now talking about maybe he wants to explore a deal with Iran. And by the way, maybe that deal would look a lot like the JCPOA, but it would have a different name. Maybe like the TCPOA or something for Trump, and that would be just fine. But I think there is just as good a chance that they’re going to explore that is that they will go back down the maximum pressure path that you just described.
Jason Bordoff: And then what you did with Russia was say maybe there’s an innovative way out of this conundrum where you can impose the pain without the pain on yourself by taking, letting the oil continue to flow to market by making sure people don’t pay as much as they otherwise would for it. The price cap on Russian oil, I think that proved a lot harder than maybe some people hoped and didn’t quite have the effect it did. Tell me if you think it’s wrong, and does that kind of tell us that actually this is just a trade off? The reality is if you want to use sanctions against oil, it’s going to have impacts on the global oil market. You can ask the Saudis to increase production, you can use the SBR, but that’s just the way it is.
Jon Finer: Look, I think the price cap worked quite well for a while. For a while, and I think there was a significant period of time in which Russia was getting less for its oil than it would’ve gotten absent the price cap less in terms of a larger delta between the price that they were getting and the market price. I think as the market price started to go down and as Russia effectively as countries that are under sanctions pressure tend to do, found ways to evade sanctions and get its product to market, the gap between the level of the price cap and the market price ended up decreasing. And so as a result, we didn’t just sit back and say, that’s unfortunate. We actually then took steps. We weren’t willing to take in a different price environment earlier in the conflict and actually impose sanctions, not just on Russian energy producers, but also on the financial institutions that facilitate energy transactions for Russia. We felt like we had more scope to do that in a price environment in which you could increase the price of oil on the international market a little bit and not really hurt people because the price was low and the belief was there was sufficient excess supply to make up gaps.
Jason Bordoff: Can give you my take on that. Please tell me if I’m wrong. I think three things happened at the same time, roughly. One is Europe said we’re not buying Russian oil anymore, it’s got to find another home. So the oil got rerouted to other places like Indian refiners and other stuff, and that drove a discount into the market because there was mismatches in terms of the crude quality and all of that. And then you had the ban on shipping insurance, which threatened to take a lot more Russian oil actually off the market. And then the price cap, which said you can use the insurance as long as you stay under a price cap. I think the third sort of neutered the second, but the discount you’re talking about was driven by the first. It was more driven by Europe’s forcing oil to go elsewhere than it was the price cap.
Jon Finer: Yes. But the goal, I mean really important to also remind ourselves what the goal of the price cap was. The goal of the price cap was not to take Russian oil off the market. It was reduce Russian revenue, reduce Russian revenues, and I think it did for a while, meaningfully reduce Russian revenues. And over time that reduction was less. Now, what’s also interesting about Iran, Russia, we haven’t talked about Venezuela, which is another obviously energy producer. That’s the subject of US sanctions, is you can’t look at any of these issues purely in a vacuum for a whole range of reasons, but including because of the implications for the energy market. If the world needs whatever it is, is it a hundred million barrels a day roughly of oil, about a hundred million barrels a day of oil? If the world needs that, alright? And you are going around imposing sanctions that are going to take some of those barrels off the market.
If you go 10 out of 10, maximum pressure on all of those producers that you were trying to punish and not punish for the sake of punishment, you’re trying to change their behavior with these sanctions. But if you go 10 out of 10 at all of ’em at the same time and drive those barrels down, you are going to have a harder time making up the gap with whatever spare capacity exists. So you also have to look at what you’re doing in other places and who’s up and who’s down in a given moment or else you risk losing support for your own approach because you’re spiking the price of oil in the United States.
Jason Bordoff: And is that where the geopolitical influence that Saudi has? I’ve often said it’s not because they’re the largest producer, actually they’re not. The US is the largest producer. They hold spare capacity. That’s a very unique thing. And that matters.
Jon Finer: Yeah. Now it’s their sovereign decision about how to use that. And sometimes they’re interested in aligning themselves with the policy of priorities and preferences of the United States. And sometimes they’re not. But yes, they play a key role for the reason that you just described.
Jason Bordoff: How big a geopolitical issue or how much does it matter that the US, the shale revolution that the US went from importing 60% of its oil to being a slight net exporter went from 5 million to, what is it now? 13 and half million barrels a day. It’s often framed as this enormously consequential thing. Geopolitically. Do you think that’s true?
Jon Finer: I think that over time it will become more true. I think it is true to an extent today. I think over time it will become more true. But for reasons you could articulate frankly far more clearly than I can, it is not like there is just a one for one substitute. Every barrel the United States produces makes us one barrel less dependent on international oil supply. It doesn’t quite work like that because there are different mixes within oil that can only be refined in certain places in certain ways. And so yes, we have reduced our dependency and our vulnerability to foreign energy shocks because we are now this mega behemoth producer, which we weren’t 20 years ago, but we have not ended it and we probably won’t end it in the near term. Over time, I think there are certain investments we could make that would help continue to bring it down, but probably not to zero.
Jason Bordoff: I think we’re over time. But lemme ask you one last topic we haven’t touched on, which is AI, the AI revolution and competition with China. Lots to say about that, but particularly this competition over the need for energy to power this. And that’s a new motivator to say, let’s make sure we have enough domestic energy supply. How do you think about the economic competitiveness, national security competition with China, risks of AI? And if we were to see that it’s hard to build energy in the United States, permitting is a problem and these hyperscalers are putting their data centers in the UAE or Saudi or elsewhere just to take advantage of a lot of lower cost energy. Would that be a national security problem?
Jon Finer: I think it would. But with some caveats. Look, we could do a whole podcast on this question. It would be a very interesting one. And this whole idea…
Jason Bordoff: That’ll be episode two.
Jon Finer: …whether chips or the new oil or whatever when it comes to geopolitics. But I think some of this is going to be determined by which is a bigger factor in driving the kind of AI revolution. Is it just raw horsepower compute, which is obviously going to be a component. In which case, all of these questions that you’re just raising about hyperscalers and where they can get the best combination by the way of regulatory environment, availability of resources like water and electricity and a permitting process that allows these things to be done quickly. If there even is a permitting process which many countries don’t have at all, that is going to be what determines who can win this compute arms race. And we are going to have to make major changes here and by the way are making significant changes here to enable the United States to compete on that scale.
And then there’s the sort of quality dimension. Who is making the most advanced leading-edge chips that are going to enable the most effective, most capable models and help win the race to AGI. Obviously both of those factors are going to play a role in who ultimately prevails, but there is a lot of active debate around which of those factors is going to be more important or is it a 50-50 split? And one of the things that has now influenced this debate is this recent development of the DeepSeek PRC model, which they claim, and we can’t take anything at face value that comes out of China unfortunately, but they claim was developed without the use of massive amounts of compute. I have no idea if that is true or accurate. I don’t think any of us really know. But if it is true that the overall role of compute in developing the most advanced models goes down, that kind of pushes you in one direction. If it is true that raw horsepower is going to continue to be a major determining factor in who not just wins but sort of stays a step ahead or two steps ahead, which the United States is still today over time, that pushes you in a different direction policy wise. And you see this playing out in the discourse right now, people sort of arguing about this. It’ll be very interesting to watch.
Jason Bordoff: Yeah, well we need to make policy decisions in the face of a lot of uncertainty about that question and many others. Alright, well there’s so much more I want to talk about. Fortunately you’re with us all year at least, so we’ll have more time. My takeaway from all of this was the Mets won the 1986 World Series over Boston.
Jon Finer: You had to go back there, had to go back there at the end.
Jason Bordoff: And Jon Finer, thanks for being with us. Thanks for your service again, and excited to have you as part of the Energy Center here at Columbia now.
Jon Finer: A lot of fun. Thanks very much.
Jason Bordoff: Thank you again, Jon Finer and thank you for listening to this week’s episode of Columbia Energy Exchange.
The show is brought to you by the Center on Global Energy Policy at Columbia University School of International and Public Affairs. The show is hosted by me, Jason Bordoff and by Bill Loveless. The show is produced by Erin Hardick and Mary Catherine O’Connor from Latitude Studios. Additional support from Caroline Pittman, Jon Elkin, Kevin Brennan, Luisa Palacios, and Kyu Lee. Sean Marquand engineered the show.
For more information about the podcast or the Center on Global Energy policy, please visit us [email protected] or follow us on social media @ColumbiaUEnergy. And please, if you feel inclined, give us a rating on Apple Podcasts, it really helps us out. Thanks again for listening. We’ll see you next week.
